Britain’s financial regulator has come under fresh controversy and has been accused of failing from “top to bottom” after a report revealed its staff were paid out £125mn in bonuses since 2016. Campaigners said the payouts at the Financial Conduct Authority (FCA) were an “absolute insult” to savers who had lost their life savings because of the regulator’s systemic failings.
Details of the bonus payouts were obtained by the Observer and reveal £125,529,590 has been paid out in bonuses at the watchdog since 2016, including bonuses worth £45,000 each for executive directors. In the year to March 31, 2021, £19.8 million in bonuses was paid out with average payouts of about £5,399 for those receiving awards.
Business activist and co-founder of the True and Fair Campaign, Gina Miller said, “These payouts are an absolute insult to people who have lost their life savings or have had their lives decimated because we have a regulator which isn’t fit for purpose. We have seen over the last five years some of the biggest financial scandals due to a lack of enforcement and regulatory rigour. It’s unbelievable against that backdrop to award these bonuses. This is an organisation which has failed from top to bottom.”
FCA boss Nikhil Rathi is now proposing to scrap the bonuses, after two independent reviews found the regulator had acted too slowly to protect consumers. He said the payouts had “not been effective at driving individual or collective performance.”
The FCA was criticised last December in a damning report by the former court of appeal judge Dame Elizabeth Gloster, over its failure to effectively supervise and regulate the mini-bond issuer London Capital & Finance (LCF). About 11,600 investors lost savings of up to £237m when LCF went into administration in 2019.
It was criticised in another independent review published in December for ineffective regulation over the collapse of the Connaught Income Fund in 2012. The FCA said at the time it was “profoundly sorry” for the mistakes that had been made. It was also criticised for failing to intervene before the collapse of Neil Woodford’s £3.1bn Woodford Equity Income Fund. It was shut down in October 2019 with heavy losses for tens of thousands of investors.
Meanwhile, in an FCA consultation document that has been circulated to staff, Rathi said it was “increasingly difficult” to justify the bonus payouts after the LCF and Connaught fund reviews found the regulator had acted too slowly to protect consumers. He wrote, “This is particularly so when bonuses are paid to the vast majority of staff and not just those who have performed exceptionally.”